John R. Commons's Puzzling Inconsequentiality as an Economic Theorist

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"Veblen, Commons, and Mitchell [are the great triumvirate of institutional economics]. These men, both in regard to their influence and their personal stature, stand far above their contemporaries. Of the three, Commons . . . probably [will be] the most important and influential . . . in the long run. . . . [For in Commons] we see the most successful attempt to enlarge the borders of the economic abstraction. Books about Veblen appear every year; Mitchell inspires festschrifts and memorial volumes; Commons gathers dust on the shelves. The future, I venture to predict, will reverse this order." Kenneth Boulding [1957, 5-6, 10, 8] forwarded this bold prediction at the most recent AEA panel convened specifically for the purpose of discussing the nature and viability of the so-called "institutional" approach to economic analysis. The year was 1956. And even though Boulding's biases are apparent in his devaluation of Veblen [cf. Boulding 1957, 9], he is to be congratulated for having discerned that Common's work has profound significance with respect to our theoretical understanding of the market system.(1)

It is now 1994, and from the present vantage point it would be difficult to award Boulding high marks for prescience with regard to Commons's future eminence. True, Commons is widely recognized to have been perhaps the principal figure formulating the intellectual vision underlying the New Deal.(2) But this recognition notwithstanding, it is difficult to detect much interest nowadays on the part of economists in Commons's contributions to "economic abstraction" - that is, to economic theory. Despite repeated pronouncements that his theories were intended only to supplement conventional economic analysis, Commons's abstractions are neither mentioned in mainstream treatises nor utilized, even unknowingly, in mainstream research. One will search in vain through theory texts and field texts alike for "economic abstractions" derived from Commons.(3) In short, Commons's impact on the "post-Boulding" evolution of the mainstream perspective in economics has been not only negligible but nonexistent.(4)

What will probably be of greater interest to institutional economists is the widespread neglect of Commons the economic theorist even within institutional economics. For there is little evidence in the contemporary institutional literature, except in the work of a small group of still-active mid-century Wisconsin Ph.Ds. and an even smaller group of intellectual historians, of genuine interest in Commons's abstractions - whether his broad constructs such as negotiational psychology [cf. Biddle 1990] and Reasonable Value [cf. Wolfe 1936; Ramstar 1991b], his "fundamental unit of analysis," the transaction, or the "principles" he adduced to account for the content of transactions, scarcity, efficiency, working rule and custom, sovereignty and futurity.(5) I use the term "evidence . . . of genuine interest" in order to exclude the myriad references to Commons that are in actuality little more than "ceremonial" nods to Commons qua putative "founder" of institutional economics. I, of course, recognize that there is a great deal of common ground with respect to economic theory in the works of Commons and the other "giants" in the pantheon of institutional economics.(6) My point is only that Commons's own abstractions do not appear to have been very widely utilized by institutional economists in the "post-Boulding" era. It is the neglect of his ideas, even by those who pay homage to him, that has led me to use the term "puzzling inconsequentiality" in characterizing Commons's impact as an economic theorist.

The question is why. This is the issue I wish to explore. First, I spell out why I believe Commons's constructs cannot be synthesized into the "post-Boulding" mainstream "economic abstraction," that is, cannot be successfully grafted onto neoclassical economics, and hence why Commons must be ignored by neoclassical practitioners. …